A weary Gov. Phil Murphy wheeled a wide handshake to his bitter, intraparty adversaries Saturday night in a sign of unity.

"There was never a disagreement over our values and principles, just in how best to get there,'' Murphy said, referring to Senate President Stephen Sweeney, D-Gloucester, and Assembly Speaker Craig Coughlin, D-Middlesex.

Murphy got them all there to a balanced budget agreement, but it was largely on the Legislature's terms, and that made for a big loss for the rookie governor.

As the threat of a chaotic, government shutdown moved closer to reality, Murphy blinked. Instead of fixing the broken, live-for-the-moment style of governing, as Murphy often said was his intent, the self-proclaimed outsider was outmaneuvered by the entrenched powers that run the Legislature.

The agreement may end the drama of the moment but it bodes poorly for Murphy and his dreams of transforming New Jersey into a progressive bastion, a booming, vibrant California of the East.

This budget was his best, and perhaps last, chance to raise taxes and the revenue needed for the major investments in education, mass transit and public employee pensions. The political calendar over the next several years will make raising taxes politically untenable, which leaves Murphy with limited options to finance other priorities.

Murphy can only hope that a booming state economy will fill state coffers with unexpected windfall, or he'll have to cut spending or reform health and pension benefits of public employees – which is a top priority of Sweeney, his chief political nemesis.

That could put Murphy in the uncomfortable position of exploring benefit givebacks, which is hotly opposed by public employee unions, his most loyal supporters.

“We have to fix government. We have to do some things that are going to be hard,'' Sweeney said after Saturday night's press conference. "And the sooner we get started, the better we are.”

Murphy surrendered on the top target of the budget squabble, a plan to raise income taxes on millionaires to 10.75 percent. It was a pledge he made repeatedly on the campaign trail. It seemed like a no-brainer: A majority of the public supported the idea, according to polls, and the Legislature had approved it five times before.

Sweeney was among the staunch champions of the millionaires tax but quickly became a stubborn opponent after President Donald Trump signed his federal tax overhaul with a strict new cap on state and local tax deductions.

New Jersey Gov. Phil Murphy, left, steps forward to listen to a reporter's question news conference with Lt. Gov. Sheila Oliver, right, after he and Democratic legislative leaders failed to strike a budget deal, Friday, June 29, 2018, in Trenton, N.J. The governor and senate democratic leaders have not agreed on a a deal and if a balanced budget is not in place by midnight Saturday the state government faces a shutdown. The major sticking point has been how much to raise taxes. The first-term Democratic governor wants to raise the income tax rate on people making more than $1 million to 10.75 percent.(Photo: Julio Cortez, AP)

The provision stands to harm wealthy homeowners, and Sweeney feared it would prompt hordes of them to seek refuge to tax-haven states in the South. But many statehouse observers suspected that Sweeney used the rationale as an excuse to punish Murphy for pledging his allegiance to the New Jersey Education Association, one of Sweeney's most bitter enemies.

Murphy stubbornly insisted on the millionaires tax despite Sweeney's opposition, as well as Coughlin's. On Friday, Sweeney and Coughlin sought to break the logjam by taxing millionaires who earned $5 million or more at 9.95 percent.

Murphy quickly dismissed it as empty symbolism, arguing that it would only affect 1,760 taxpayers while letting most of the state's 21,000 millionaires off the hook. Without mentioning Sweeney by name, Murphy said he was "protecting" millionaires.

"I literally don’t get that,'' Murphy said.

But in Saturday's final agreement, Murphy signed onto a plan that gave a pass to most millionaires. He accepted the tax on $5 million-plus earners after Sweeney agreed to boost the rate to 10.75. He defended the move, saying that the higher rate raised roughly $80 million more than what was projected by Sweeney on Friday night.

"Tax fairness continues to be an objective in this state,'' he said. "I hope all ships rise when the tide comes in."

Maybe, but this "multi-millionaires tax" – as he re-dubbed it under questioning from a reporter – raised only a fraction of what Murphy originally sought. And it left his overall goal of imposing new, "sustainable" revenues far short.

Assembly Speaker Craig Coughlin and Senate President Stephen Sweeney exiting the building where they had negotiated with Governor Murphy's this afternoon with no budget deal.(Photo: Chris Pedota/NorthJersey.com)

Murphy's original budget called for raising $1.3 billion from millionaires and by restoring the sales tax from 6.625 percent to 7 percent, a proposal that never got off the ground. As a result, the agreement will raise $280 million, or only about 21 percent of what Murphy originally sought from the two major taxes.

Murphy also agreed to accept largely the Legislature's wish list, including the kind of stopgap "gimmickry" he vowed to end.

He agreed to a corporate tax hike that will be phased out in four years, instead of two. Murphy had been cool to a corporate hike from the beginning, fearing it would cause businesses to leave and take their employees with them. But he said the final corporate tax agreement "got to a much better place today."

And Murphy also agreed to Coughlin's plan to raise revenue by extending "amnesty'' to tax delinquents.

That's not to say Murphy didn't walk away with some important gains. Lawmakers agreed to add $57 million for pre-kindergarten classes, a Murphy initiative. They also agreed to $25 million installment on Murphy's plan to provide free community college tuition, $20 million more than what was included in the legislature's budget. Lawmakers also signed off on $126 million increase in NJ Transit funding.

And the budget will include a $750 million surplus, which will certainly earn brownie points with Wall Street analysts who slapped the state with 11 separate downgrades under former Gov. Chris Christie.

But the budget squabble was never over the spending side of the ledger. It was a debate on paying for them. And in that debate, Murphy came out on the losing end.

The reality is that Murphy just didn't have enough votes in either house to counter Sweeney and Coughlin's supporters. Murphy failed a sustainable plan to sell his tax hikes to legislators and the public.

In the final weeks, a nonprofit group aligned with Murphy aired largely positive, thematic ads that made no mention of the budget. As pressure built, prominent allies, like former Vice President Al Gore, tweeted support. But it budged no one.

And next year, all 80 members of the Assembly will be on the ballot. Coughlin, who will oversee the effort, wants no part of signing a tax increase. The Senate will be up for reelection in 2021. That leaves a very narrow window to raise taxes, and given Sweeney's reluctance to raise them, its hard to see a scenario where they can be raised in Murphy's term.

"But unlike Washington, D.C, we reach across the table, we find common ground and we move forward as one,'' Murphy said.